PAYCHECK PROTECTION PROGRAM LOAN
|9 Months Ended|
Sep. 30, 2020
|PAYCHECK PROTECTION PROGRAM LOAN|
|NOTE 12 - PAYCHECK PROTECTION PROGRAM LOAN||
On May 14, 2020 the Company executed a promissory note (the “PPP Loan”) evidencing an unsecured loan in the amount of $28,000 under the PPP, which was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by SBA. The Loan has been made through Citizens Business Bank (the “Lender”).
The PPP Loan has a two-year term and bears interest at a rate of 1.00% per annum. Monthly principal and interest payments are deferred for six months. Beginning seven months from the date of the PPP Loan, the Company is required to make monthly payments of principal and interest of approximately $1,575 to the Lender.
The PPP Loan contains customary events of default relating to, among other things, payment defaults, providing materially false and misleading representations to the SBA or Lender, or breaching the terms of the PPP Loan documents. The occurrence of an event of default may result in the immediate repayment of all amounts outstanding, collection of all amounts owing from the Company, or filing suit and obtaining judgment.
Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of loan granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. However, no assurance is provided that forgiveness for any portion of the PPP Loan will be obtained.
The interest expense during the three months and nine months ended September 30, 2020 were $71 and $107, respectively. As of September 30, 2020, the accumulated interest on the PPP Loan were $107. $15,445 of the principal will due by September 30, 2021, and the full principal will due by May 13, 2022.